An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:

Any reference on the face sheet of the appeal tribunal decision, as well as in the decision itself, to "Evolution Technical Systems" is changed to "Evolution Technology Systems."

That part of the FINDINGS OF FACT and CONCLUSION OF LAW section beginning with the second full paragraph is deleted and the following substituted:

From 1999 through 2004, Todd Mailandt (Mailandt) provided information technology services to clients of the putative employer (Evolution). In 2000, Mailandt signed an agreement with Evolution which, among other provisions, called for him to receive $30 an hour for performing these services, and characterized him as an independent contractor.

At hearing, the parties agreed, and the administrative law judge ruled, that the proper employer entity here is Evolution Technology Systems LLC, not Evolution Resources LLC, a related company but one for which Mailandt has not performed services.

A preliminary inquiry focuses on when Evolution would have become an employing unit. Wis. Stat. § 108.02(13)(e) provides that an entity becomes
an employing unit if either employee wages totaling at least $1,500 are paid in a calendar quarter or if there is at least one employee who has performed services in at least 20 different weeks in a calendar year. The record shows (see exhibit #2) that Mailandt did not earn $1,500 in any calendar quarter, or perform services in at least 20 calendar weeks, until 2001. The record does not show that any other worker ever met these thresholds. As a result, the evidence of record shows that Evolution became an employing unit for contribution purposes in 2001.

Evolution argues that the fact that the 2000 agreement provides that Mailandt would be performing services as an independent contractor should define his employment status here. However, this employment status is to be determined by statute, not by the terms of a collective bargaining contract or other private agreement.
Roberts v. Industrial Comm., 2 Wis. 2d 399 (1957); Knops v. Integrity Project Management, UI Hearing No. 6400323AP (LIRC May 12, 2006) (the intent of the parties is not a condition considered in determining a claimant's status, let alone controlling it). The cases cited by Evolution in support of its argument relate to the workers compensation program, not the unemployment insurance program, and are inapposite as a result.

Wisconsin Statutes § 108.02, states as follows, as relevant here:

(12) Employee.

(a) Employee' means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b), (bm), (c), (d), (dm) or (dn)...

(bm) During the period beginning on January 1, 2000, with respect to contribution requirements, and during the period. beginning on April 2, 2000, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that the individual meets 7 or more of the following conditions by contract and in fact:

1. The individual holds or has applied for an identification number with the federal internal revenue service.

2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed.

3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing such services.

5. The individual incurs. the main expenses related to the services that he or she performs under contract.

6. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

7. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

8. The individual may realize a profit or suffer a loss under contracts to perform such services.

9. The individual has recurring business liabilities, or obligations.

10. The success or failure of the individuals business depends on the relationship of business receipts to expenditures...

(15) Employment.

(a) 'Employment", subject to the other provisions of this subsection means any service, including service in interstate commerce, performed by an individual for pay....

A two-step analysis is used to determine whether an individual is an employee.
Goldberg v. DILHR, 168 Wis. 2d 621, 625 (Ct. App. 1992). The first step is to determine whether the individual has been performing services for an employing unit, in an employment. Wis. Stat. § 108.02(12)(a). An "employment" is "any service . . performed. . . for pay." Wis. Stat. § 108.02(15)(a). There is no dispute that Mailandt performed services for Evolution for pay. A presumption therefore arises that such services were performed as an employee. The burden then shifts to the putative employer to establish that the individual is excepted from employee status by some statutory provision.
See, Dane County Hockey Officials, UI Hearing No. S98001O1MD (LIRC Feb. 22, 2000);
Quality Communications Specialists, Inc, UI Hearing Nos. S0000094MW, etc,. (LIRC July 30, 2001):

The record does not show that Mailandt held or applied for a federal employer identification number (FEIN) within the meaning of
condition 1. Evolution argues that the fact that Mailandt holds a social security number and is permitted by the IRS to use this number as his taxpayer identification number satisfies this condition. However, the commission has consistently held that possession of a social security number does not satisfy condition 1.
See, e.g..,Angel Care, UI Hearing No. SO200141MW (LIRC Dec. 30, 2004);
Rabe v. Tatge, UI Hearing No. 05003125 (LIRC Nov. 10, 2005);
Oil Equipment Co., Inc., UI Hearing No. S0300057MW (LIRC Dec. 30, 2004).

The parties agree in their arguments that Mailandt filed a schedule C for tax years 2000 and thereafter, thereby satisfying
condition 2. However, the evidence of record shows that Mailandt first filed a schedule C for the 2001 tax year. As a result, consistent with the statutory language, this condition would not be deemed to have been satisfied until 2002.

The focus of condition 3. is upon determining whether a separate business,
i.e., an enterprise created and existing separate and apart from the relationship with the putative employer, is being maintained with the individual's own resources.
See, Princess House, Inc., v. DILHR, 111 Wis.2d 46, 330 N.W.2d 169 (1983);
Larson v. LIRC, 184 Wis.2d 378, 516 N.W.2d 456 (Ct. App. 1994); Diane Egan/Health Exams Plus, Inc., UI Hearing No. S0300071JV (LIRC April 15, 2005);
Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 1999). In
Quality Communications Specialists, Inc., supra., the commission clarified that all parts of the test articulated in condition 3. must be met in order for the putative employer to satisfy its burden. .Although the record shows that Mailandt used certain of his own equipment,
e.g., his laptop computer and certain diagnostic software, it does, not show that he was actually engaged in a separate business with an office devoted to that purpose. The fact, as implicitly argued by Evolution, that Mailandt necessarily had some location in his home where he used his computer to receive assignments and do related recordkeeping, does not satisfy the requirement that he have a. separate business office. Moreover, during the time period at issue here, Mailandt, other than as an employee of Columbia St. Mary's Hospital, did not perform, or seek to perform, information technology services for pay for any entity other than Evolution, a circumstance generally inconsistent with the existence of a separate business.
See, Prince Cable, Inc., UI Hearing No. S9900227MW (LIRC Feb. 23, 2001).

To satisfy condition 4., it must be established that Mailandt operates under contracts to perform specific services for specific amounts of money, and that, under these contracts, he controls the means and method, of performing the services.

Even if, as Evolution argues, Mailandt controls the means and method by which he performs information technology services, condition 4. requires multiple contracts. These may take the form of multiple contracts with separate entities, or multiple serial contracts with the putative employer if such contracts are shown to have been negotiated "at arm's length," with terms that will vary over time and will vary depending on the specific services covered by the contract. The existence of
bona fide multiple contracts tends to show that the individual either has multiple customers, or that he has periodic opportunities for "arm's length" negotiation with the putative employer as to the conditions of their relationship, and that he is not dependent upon a single, continuing relationship that is subject to conditions dictated by a single employing unit:
See, T-N-T Express LLC, UI Hearing Nos. S9700385, etc. (LIRC Feb. 22, 2000);
Dane Co. Hockey Officials, supra. Here, Mailandt operated under a single contract with Evolution with terms that did not vary and were apparently dictated by Evolution. Evolution argues, however, that, in addition to its 2000 contract with Mailandt, contracts were separately negotiated with Mailandt for each job he performed. However, these assignment-specific exchanges between Mailandt and Evolution do not constitute separate contracts. They are not akin, for example, to the individual contracts signed with homeowner customers in furtherance
of an umbrella agreement with the putative employer in
Quale & Associates, Inc., d/b/a Handyman Connection, UI Hearing No. SO2002O1MW (LIRC Nov. 19, 2004). As a result, condition 4. is not satisfied.

Applying condition 5. requires a determination of what services are performed under the contract, what expenses are related to the performance of these services, which of these expenses are borne by the person whose status is at issue, and whether these expenses constitute the main expense.
Lozon Remodeling, UI Hearing No. S9000079HA (LIRC Sept. 24, 2999); Quality Communications Specialists, Inc.,
supra. This inquiry requires quantification of these expenses.

The expenses related to Mailandt's performance of services for Evolution would apparently include the cost to Evolution of maintaining an office to process requests from customers and communicate with Mailandt, recordkeeping, and liability insurance; and the cost to Mailandt of a laptop computer and diagnostic software, traveling to customer locations, a cell phone, and certain small hand tools such as a screwdriver. None of these costs or, for example, the useful life of Mailandt's laptop or the percentage of time he used his personal laptop, vehicle, and cell phone for business purposes, are specified in the record. It is not possible from this evidence to determine with any degree of certainty whether Mailandt bore the main expense here. As a result, condition 5. is not satisfied.

In regard to condition 6., it is not simply the obligation to do re-work without additional pay which is the determining factor, because this obligation is typical as well of piecework employees.
See, T & D Coils, UI Hearing No. S9800147MW (LIRC Dec. 15, 1999);
Spencer Siding, Inc., UI Hearing Nos. S0300142GB, etc. (LIRC June 2, 2006). Here, however, not only was Mailandt expected to do re-work without additional pay, but was responsible for any claim a dissatisfied customer may have against Evolution resulting from Mailandt's work. As a result, condition 6. is satisfied.

Condition 7. requires that workers receive compensation for the services they perform on a commission, per-job, or competitive-bid basis and not on any other basis. The record shows that, although an hourly rate was specified in Mailandt's agreement with Evolution, Mailandt would estimate the number of hours a particular job would take and would then be paid based on this estimate regardless of the amount of time the job actually took. This constitutes payment on a per-job basis, and as a result, condition 7. is satisfied.

Condition 8. examines whether, under an individual contract for a worker's services, there can be a profit (if the income received under that contract exceeds the expenses incurred in performing the contract), as well as whether there can be a loss under that contract (if the income received under that contract fails to cover the expenses incurred in performing the contract). It is arguable, as the commission concluded in
Quality Communications Specialists, Inc., supra., that the receipt by Mailandt of more in pay for his services than he was required to spend on the various costs he incurred in performing such services would constitute "realiz[ing] a profit.. .under contracts to perform services." However, given that Mailandt was guaranteed payment for every job he accepted, the record does not support a conclusion that, over the term of his contract with Evolution, there was a realistic possibility he could suffer a loss within the meaning of condition 8.
See, Lozon Remodeling, supra.; Dane Co. Hockey Officials,
supra. Condition 8. is not satisfied.

Condition 9. requires proof of a cost of doing business which the worker would incur even during a period of time he was not performing work through the putative employer, such as the cost of an office lease, professional fees, or liability insurance. The record does not show that Mailandt had such continuing costs. Evolution argues that the depreciated cost of Mailandt's laptop computer should be considered a qualifying continuing cost. However, since the laptop computer was used by Mailandt for personal as well as business purposes, it would not qualify as a recurring business liability or obligation for purposes of this condition.

The commission has interpreted condition 10. as intending to examine the overall course of a worker's business.
See, Quality Communications Specialists, Inc., supra. Condition 10. requires that a significant investment have been put at risk and there is the potential for real, success through the growth m the value of the investment and for real failure in the sense of actual lobs of the investment.
See, Thomas Gronna, The Floor Guys, UI Hearing No. S9900063WU (LIRC Feb. 22, 2000). The record does not establish that Mailandt had put a significant investment at risk.

In summary, only conditions 2. (beginning in 2002), 6., and 7. are satisfied. Since Wis. Stat. § 108.02(12)(bm) requires that seven conditions be satisfied in order for a worker to be considered an independent contractor, the satisfaction of only three of the ten conditions compels the conclusion that Mailandt performed services for Evolution as an employee, not an independent contractor, during the relevant time period.

As a result, beginning in 2001, Mailandt performed services as an employee for Evolution within the meaning of Wis. Stat. § 108.02(12)(bm).

DECISION

The decision of the administrative law judge, as modified, is affirmed. As stipulated by the parties, the liable employer is Evolution Technology Systems LLC. Based on its employment of Todd Mailandt, the employer is liable, effective January 1, 2001, for contributions to the Unemployment Reserve Fund.